MARKET REPORT: Esure set for a speedy debut as investors like the look of another insurer

Dealers last night were cocksure that esure will enjoy a successful market debut on Friday when it becomes the biggest FTSE 250 flotation of the year so far with a valuation of £1bn-plus.

Shares of the Go Compare-to-Sheilas’ Wheels insurance group, which was founded by businessman Peter Wood of Direct Line fame, are expected to be priced around the short 300p level, with intermediatory demand yesterday described as ‘excellent’. The indicative IPO price range was 240p to 310p.

The shares are expected to trade at a useful premium which will make esure’s staff very happy as they will be able to share a £3m payout on the company’s flotation.

Needless to say multi-millionaire
Peter Wood will add several more millions to his coffers as his stake
falls to 35 per cent from 49 per cent, while Martin Hughes’ fund Tosca
will sees its shareholding reduced to 16 per cent from 39 per cent. Wood
remains the biggest shareholder and stays on as chairman.

The
float comes three years after Wood led a management buy-out of a 70pc
stake from Lloyds Banking Group, which valued the insurer at just £260m.
That’s not a bad return in three years, is it?

Around £50m of the cash raised will be used to pay off company debts.

Electra Private Equity, which has a 7 per cent stake in Esure, rose 8p to 2373p.

Esure’s backers will be hoping that it hits the ground running just as shares of builder Crest Nicholson did when it made a spectacular return to the main market in February.

Priced at 220p, the shares rocketed to 289p and yesterday closed 12p better at 283p.

Investors
in AIM stocks and shareholders in housebuilding companies were the only
people raising a cheaper pint of beer to toast the underwhelming
Budget. Chancellor Osborne’s move in abolishing stamp duty on AIM
investments was definitely a step in the right direction to help boost
activity in the junior market which has seen volumes decline
significantly in recent weeks.

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Housebuilders
were through the roof with gains up to 7 per cent after he announced a
new initiative called ‘Help-to-buy’ to help struggling home buyers. Barratt Developments led the charge with a gain of 15.8p to 255.6p.

Yet
dealers overall were of the opinion that Osborne’s proposals had not
gone far enough to boost growth and with the Cyprus crisis obviously
still giving cause for concern, the Footsie reacted from 6,475 to finish 8.62 points easier at 6,432.70. The FTSE 250 dipped 5.24 points to 14,030.68. Wonderful Wall Street jumped
85 points initially to a new intra-day record ahead of news from the
Federal Open Market Committee, which was due to conclude its two-day
policy meeting. It closed 55.91 points up at 14,511.73.

Royal Bank of Scotland,
of which the UK taxpayer owns 81 per cent, rallied 6.6p to 300.2p after
Liberum Capital upgraded to buy from hold with a target price of 340p.
The broker says in 2013 RBS is on track for its first statutory profit
in six years. Following cumulative statutory losses of £37bn over
2008-12, a statutory profit of £0.5bn in 2013 would be a key milestone
for sentiment.

Still dreaming of a bid from supermarket Wm Morrison, or anybody else for that matter, online grocer Ocado added 7.8p to 161.1p.

Dog of the day was CPP,
or Card Protection Plan, which crashed to 4.9p before closing 9p or
62pc down at 5.5p. Already hit by fines for mis-selling by the Financial
Services Authority, investors sprinted for the exit after the board
failed to find a solution to its ongoing refinancing negotiations. It
warned there is ‘significant uncertainty’ as to the value of its shares.

Buyers chased Betfair
27.5p higher to 723p after the Italian finance minister signed a decree
that will allow Exchange betting in Italy. Italy is the fourth largest
gaming market in the world and largest in Europe. Broker Jefferies has a
target price of 850p.

Charlie Skinner’s thriving support services company Restore
advanced 6p to 121.5p following a £7m placing to fund the acquisition
of File & Data Storage, a record management services company in the
UK. Shop broker Cenkos placed 6.56m shares at 111p a pop with
institutional investor.

The
company’s fourth acquisition in a year accompanied good annual results.
Pre-tax profits soared 68 per cent to £6.2m on revenues 130 per cent up
at £43.3m. The dividend was hiked 50 per cent to 1.5p. Cenkos reckons
significant growth is ‘baked in’ making the current rating relatively
undemanding.

Forbidden Technologies rose 3.5p to 27p after signing a US distribution agreement with the number one avid re-seller in the world.

Boss
Drew Nelson said: ‘In the wafer market globally there are 15 players –
IQE now supplies every single one of those.’ Analysts say revenues could
rise 60 per cent this year, with shares – down 1.5p at 28p – likely to
keep pace with that.